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A Plumbing Business’ Guide to Quoting, Invoicing and VAT

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> A Plumbing Business’ Guide to Quoting, Invoicing and VAT

In 2020, plumbers were the most in-demand tradespeople, with 64% of people saying they required plumbing services at some point during the year. As such, there’s never been a better time to win new business and scale your company.

But, to run your organisation successfully and turn a profit, you need to know how to create financial documents correctly. In this article, we’ll provide a step-by-step guide on how to write a plumbing quote and invoice. We’ll also discuss how to calculate the VAT rate on plumbing services, so you know how much tax to add to each job.

What is the VAT Rate on Plumbing Services?

If your taxable turnover is likely to be over the current VAT threshold of £85,000, then you must charge VAT on your services, otherwise known as ‘output tax’. Currently, there are three rates that a plumbing business can charge, which are as follows:

Standard Rate

The standard VAT rate on plumbing services is 20% and applies to work such as:

  • Domestic repairs and maintenance
  • Work to existing structures
  • Work to newly-built structures that don’t meet the zero rate criteria

Reduced Rate

There are certain situations where you can charge a reduced rate of 5%, for example:

  • Installation of energy-saving materials
  • Renovating a property that has been vacant for two years or more
  • Residential conversion work 

Zero Rate

You do not need to add VAT to invoices for zero-rate plumbing services, which include:

  • Services for a disabled person
  • Work on new build houses
  • Work on qualifying buildings if you are the main contractor — usually, these buildings are used for charitable or non-business purposes

For more information on VAT rates, visit the GOV.UK website.

How to Write a Plumbing Quote

Before you begin putting together a quote, you must examine the issue to assess the job’s complexity. Failure to carry out this vital first step could result in unexpected problems and additional hours of work. Your customers won’t be happy if the project falls behind schedule, and your bottom line will take a hit. 

So, visit the location, take notes and then send your customer an estimate that includes these details:

1. The Rate for Your Services

To set a rate for your services, you’ll need to calculate how much you require to pay your bills and make a profit whilst remaining competitive. Many plumbing businesses choose to quote their services in minimum blocks of time. Two hours is enough time to install a new sink, for instance. 

Subsequently, it’s a good idea to make a price card and rate list as a starting point. You can then tweak your prices depending on each customer’s requirement. Also, don’t forget to factor in any additional time you spent inspecting the problem initially, as that will have cost your team time that they could’ve used to attend to another job. 

Luckily, pricing your work needn’t be a headache. With a field service management system in place, you can create a digital rate card and price list that you can easily tailor to your clients’ projects at the touch of a button. 

2. Additional Fees

When putting together an estimate, you should always cover any other expenses you or your team will incur whilst carrying out the job. Your additional fees can include the following costs:

  • Travel; you can either charge a fixed rate or calculate your mileage
  • Union dues, pensions and insurance don’t need to be itemised, but you should include them as part of your hourly or base rate
  • Emergency call-outs that cover weekends, holidays or after-hours work
3. Supplies and Materials

More often than not, plumbing jobs require you to provide supplies and materials that add to your overall costs. So, once you’ve completed your initial inspection of the problem, you should make a note of the items you think you’re going to use and price them up. 

Your technicians should turn up at the job with all the proper equipment so they can fix the issue the first time, which is why you must be thorough with your list. Fortunately, field service management software is designed to give you visibility over how much stock you have available and ensure you have enough to carry out the work.

The platform allows you to assign supplies and materials to particular jobs, meaning no one on your team arrives at a job without the right gear. Plus, you will be able to see exactly how much stock you’ve assigned to the project, enabling you to calculate the total cost quickly.

Aside from your quotes being more accurate and straightforward to create, you’ll find that your first-time fix rate increases and your technicians can attend more appointments each month.

How to Write a Plumbing Invoice

Once a technician completes a job, it is a legal requirement to send your customer an invoice. Typically, invoices establish details such as what services your plumbing business provided, how much the customer owes you and the payment deadline.

Creating accurate invoices enables you to maintain your bookkeeping and helps prevent disputes or late payments. Here are the key elements you must include on your invoices:

1. Contact Information and Company Logo

Did you know that 75% of people recognise a brand by its logo? Therefore, it’s worth taking the time to add your logo onto each invoice you send so your customers know that the invoice has come directly from your organisation. 

Your company name and contact information must also be in a large font at the top of the invoice. Next, you should include your customer’s name and address to ensure that it reaches the right person or department. 

With modern field service management software, you can handle invoicing directly on the platform and create personalised documents in seconds. For example, you can add your logo into a pre-designed template for a professional-looking invoice. 

The template also pulls through all required information, including the customer’s address, and automatically adds it into the appropriate fields. As a result, there’s less margin for human error and a reduced chance of late payments. 

2. Invoice Number, Issue Date and Due Date

When used correctly, invoice numbers make it simpler for you to organise your sent invoices, track pending payments and keep a record of your income for tax purposes. The number should be unique, around three to five digits long, and clearly visible on each invoice.

Then, you must add the invoice’s issue date, showing the customer when you sent the payment request. Clients have a certain number of days after the issue date to pay the invoice, which you must indicate by including a due date.  

3. An Itemised List of Services and Parts

Customers should be able to see what they’re paying for, so you must include the information below:

  • A description of the job carried out, the number of hours it required, your hourly rate and the total amount billed
  • Parts required to complete the job, quantities, price per unit and the total amount

Remember, technical plumbing terms make sense to you, but customers will not share the same knowledge. Keep the descriptions simple, so there is no confusion on their end — if they need to ask questions or clarify details, it will delay the payment. 

You can keep a more in-depth description of the work in your CRM (customer relationship management) system for your own record. CRMs document all interactions you have with your clients, including any notes your team makes about the job, so you can refer back to specific details whenever you need them.

4. Before and After Photos

Since plumbing is a highly skilled trade, it’s crucial that your technicians take before and after photos to demonstrate the work they did. Customers may not understand how the plumbers fixed their issues, or the plumbing may be in areas they cannot access, like under the floorboards. Sharing photos provides your clients with peace of mind that their problem is resolved.

Using a state-of-the-art field service management platform, your technicians can take photos on their mobile devices and instantly attach them to the customers’ profiles. As such, both you and your clients will have a complete record of what the plumbers did. If there are any further issues down the line, it will be much simpler to look back through the job history and resolve the problem.  

5. The Total Amount Due

Although you’ve already created an itemised list of the costs, you must also provide your customers with a total amount due on a separate line. Ideally, the total should be in bold so that it stands out.

Getting the total correct is paramount to ensuring you get paid on time. Any disputes will cause a delay in the payment process, so you should always ensure that it’s right the first time. Many field service management systems include an invoicing and payment feature that automatically pulls accurate details and costs into a pre-made template.

By digitising your invoices, you not only save time on arduous administration tasks but also lower the risk of human error and thus get paid by the deadline. That’s a win for both your back-office team and your cash flow. 

6. Payment Terms

In addition to including a due date, you must also clearly state your payment terms:

  • Late fees: Once an invoice becomes overdue, you are allowed to charge late fees. However, you should tell the client exactly how much you charge in such situations. 
  • Accepted payment methods: Tell your customers how they can pay for your services. For example, if you’re using field service invoicing and payment software, people can pay from their mobile devices the minute they receive your electronic invoice. 
  • Guarantees and warranties: If you’ve included a warranty on any parts or you offer a money-back guarantee, you need to specify the terms. For example, how long is the warranty valid? Stating these details in writing mitigates the risk of disputes further down the line.
7. Personalised Note

According to research by PWC, 42% of people say they would pay more for a friendly customer experience. Consequently, it’s a good idea to include a brief, personalised note at the bottom of your invoices.

It’s not a legal requirement to add a note, but it is a friendly touch that will make you stand out from your competitors. You can thank your customers for their business or even use it as an opportunity to request feedback and referrals.

Customers will appreciate the kind message and be left with a more favourable impression of your plumbing business, meaning they’ll be more inclined to use your services again in the future.

Field Service Management Software Unclogs the Quoting and Invoicing Process

Eradicate the time-consuming aspects of quoting and invoicing by adopting a cutting-edge field service management platform like BigChange. The system interlinks your CRM, asset management tool and pricing information so you can put together an accurate quotation in a few clicks. 

Then, once your technicians have completed their jobs, they can instantly generate invoices on their mobile devices and share them with customers in seconds. The invoices pull through all essential information, from final costs to photographic evidence, so your clients can check that they’re satisfied with the details straight away.

Plus, with BigChange Pay, making a payment has never been simpler. Instead of waiting days, or potentially weeks, to receive an invoice payment, your customers can pay the same day using a range of convenient online methods. 

Your clients will appreciate the speedy service, and you’ll free up more time to focus on doing what you do best. 

Make Quotes and Invoices for Your Plumbing Business in Seconds with BigChange

Create financial documents the fast way. 

With BigChange, you can generate and share invoices, quotes, estimates, purchase orders and credit notes in seconds. Our easy-to-use templates pull through pre-saved line items and automatically calculate job costs, so you don’t have to spend time manually inputting data. 

Want to find out more?
Discover how BigChange can make your business grow stronger, arrange a free demo today.

BigChange.com

21st January 2022

BigChange

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